Recent Comments

Month: September 2014

Businesses leaders and decision makers can’t seem to get their fill of data or business intelligence (BI). This desire is for good reason, high-quality, relevant data streamlines effective decision making, thus, creating an opportunity for businesses to succeed. Data presents itself in a variety of forms; the one most commonly used in business settings is numerical data.

The fact is that numbers don’t lie (at least that’s what we’re told) and more often than not, it is the case. Numbers don’t show favoritism, never have a bad day or get caught up in outside noise. Numbers are what they are, and as long as the parties responsible for generating the numbers are truthful, then they’re a source of reliable and relevant information for businesses to act on.

The intent of this article is to highlight the decision-making process (or lack thereof) with regards to data. With that said, let’s assume all data has already been accumulated. Therefore, I am not going to interpret the following:

Continuing with our scenario, all relevant data has been amassed and formatted into a nicely made report. The reports are distributed to all pertinent persons, and all begin to analyze the report. The distribution of the report/data can be during a meeting, prior to a meeting or at the conclusion of the meeting (follow-up data); regardless, this is when the “science” of using the data must commence.

Here is the science…ACT ON THE DATA. That is all. I’ve had experiences when business leaders acted as follows:

Accentuate the importance of gathering data to measure the effectiveness of business and assist with decision making.

Review

Explain to others the “highlights” of the data – such as a strong set of particular financial ratios versus industry averages or recent data.

Request more data prior to making a decision.

Return to STEP 2.

These leaders tend to be in “perpetual review” mode or constantly take a “wait and see” approach. By the time they decide act, previous data can already be irrelevant and replaced with new data that will change the course of action; thus, the process continues.

Wait & See Approach

I understand the logic that coincides with retrieving data prior to making decisions. I am a strong advocate of gathering data and using it for ad-hoc reporting, business forecasts, trend analysis, in addition to other forms of reporting in order to determine the best course of action.

I believe in gathering data since it frequently precedes effective decisions, and effective decisions lead to successful businesses. You have to trust the data that you’ve accrued and make decisions using it to its fullest capabilities. Using data will not only help you and your business succeed, but it will enhance others perception of you; you will appear more effective and confident, both desirable traits.

I strongly oppose accumulating data to simply accumulate more data, and then accumulate more. One can amass all the data they want, but, you have a responsibility to your business, department, co-workers, employees, whomever to utilize it and take action. To act otherwise would be inappropriate and unfair to all others involved. You spend a lot of time and effort in hoarding and reviewing data, reward yourself and others by acting on it and make a decision.

We live in a consumer-driven economy, if we want it, we can get it, and get it fast. Large retailers such as Walmart, Target, and internet giant Amazon have had success offering consumers thousands of products at their fingertips…all in the same place.

Additionally, we live in a “copy-cat” society, once somebody or something is successful; we strive to emulate this with visions of achieving a similar outcome. With that in mind, some businesses are offering their customers as many products as they can in an effort to satisfy ALL of their customer’s needs while attempting to maximize their revenue.

Though this business model has worked for the aforementioned retail and internet titans, the same cannot be said for all who attempt to mimic it. This model is not a suitable or logical for most to follow since most firms aren’t designed to offer their consumers such a large volume of products efficiently. In its most elementary state, most business models are created with the following assumed;

Progressive & Sustainable growth is a primary goal for any business.

Generate revenue.

Pay expenses.

Earn a profit.

Maximizing profits, or owners return, is the goal for most businesses. In the generalist of terms, “turning a profit” implies the business is financially healthy, since there are funds remaining after financial commitments have been met.

Profit generation is the desirable outcome businesses strive for, but, I’ve noticed a misconception with owners’ believing that increasing revenue coincides with greater profits. Negative consequences typically follow once businesses assume this notion of, “more revenue equals more profits”, and disregard what is driving the revenue as an oversight.

The adage has proven itself time and again, “you have to spend money to make money,” thus to earn the revenue your expenses will most assuredly grow. The idea of being able to offer your customers everything to entice them to shop exclusively at your business creates an opportunity for decision makers to lose control of the expense portion of the equation. By trying to be everything to everybody, you’re subject to,

Higher prices – Increasing your product offering typically means purchasing from new suppliers that you won’t have a history with or special dealer pricing.

Lack of expertise – Offering an increased amount of new products can make it challenging for your staff to be knowledgeable on all product categories and products.

Price wars – It’s not enough to simply have the products, you also have to offer the lowest price, and this often leads to “matching or beating any advertised price.”

Increase in refunds and returns – Again, unfamiliarity with products that require service or attempting to offer the most affordable product(s) means forgoing quality.

Increase in Overhead Expenses – You want to maximize the amount of time your shoppers have to shop; you may have to extend your hours and potentially increase locations.

There can also be expenses or inefficiencies that arise that are not mentioned above.

So, what are business leaders to do? Refrain from increasing their product offerings? Simply allow bigger stores to consume their market share? Maintain business “as is” and hope for the best? The answer to all of these questions is a resounding “NO.”

Our economy is evolving; consumers are evolving, as should your business. I‘m implying to evolve without forsaking what brought your business success to this point. If you’ve achieved success being an expert in a particular field or within a particular category of products, do not lose this simply in an effort to offer your customers a greater variety of products. There is a profitable place in this economy for the “experts” and the “specialists.”

As a business leader, it is your responsibility to assure that your business is progressing appropriately within its marketplace and understanding the optimal product market mix strategy is a primary function of your role. Rather than trying to be everything to everyone, focus on your target market and what product mix you can offer them that best promotes your brand/business and offers you a competitive advantage.

I’ve worked both for and with businesses that have attempted to grow for the sake of growing, and it produced lackluster results. I’ve also been associated with businesses that had a firm understanding of who they were and what they needed to ensure maintaining their success, and they often did.

Most businesses are striving to achieve the same result, maximize profits, although we’re all playing the same game; we all have different pieces to utilize. The strategy we employ and how we use our “game pieces” dictates who advances and who regresses. A critical part of the game and strategy is identifying your strengths and maximizing them to their fullest capabilities, the appropriate product market mix strategy will offer the firm a definitive advantage and increase the likelihood of sustainable success.